Senate Approves Bill to Protect Against Lending Abuses

President Obama Expected to Sign off On Overhaul Legislation

The financial overhaul bill approved last night by the U.S. Senate won’t only increase government oversight to prevent another economic collapse. Students who use debit and credit cards or who have taken out or plan to take out private student loans will also benefit.

The bill includes the creation of the Consumer Financial Protection Bureau, an independent entity that will exist within the Federal Reserve to protect borrowers. What does this mean for students? The bureau will be there to protect students from abusive lending, and gives students a point of resolution if they feel they have issues with their private lenders, according to an article on the measure in The Chronicle of Higher Education.

The bill also requires that debit and credit card companies lower the fees that colleges must pay when students use the cards. Currently, companies are charging “swipe fees” of 1 to 2 percent of transaction amounts, according to The Chronicle, putting quite a bit of pressure on struggling college bookstores. The legislation next goes to President Obama, who is expected to sign off on it. Also in the bill, the government will get more power to shut down companies that pose a threat to the country’s financial system. As the troubled economy has led to marked changes in higher education, including increases in tuition and fees, the introduction of wait lists at colleges that had never used them before, and, in worst-case scenarios, the shuttering of colleges, the bill could even give struggling schools some sense of hope.

Pell Grants could also see a boost if a spending bill approved by the U.S. House of Representatives’ Appropriations Committee yesterday continues to move through Congress. According to another article in The Chronicle, the bill would raise spending on Pell Grants by $5.7 billion for the 2011 fiscal year, keeping the federal grants at the maximum levels of $5,550 per eligible student. The Federal Pell Grant, which is available to those students with the highest unmet financial need, has increased significantly over the years; students were able to receive $4,050 in the 2006-2007 academic year. The panel also approved an additional $1 billion for the National Institute of Health. According to The Chronicle, legislators hope that funding could go toward “translating basic research results into practical and available cures and treatments.”

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